The latest/next thing in China real estate - logistics?

Real estate logistics sector in China seems to be attracting a lot of interest these days.

A few weeks ago, I had a chance to moderate the China panel at the PERE Asia Summit 2013 in Hong Kong. One of the questions we asked to the audience (and the event was very well attended, with over 400 participants, with many LPs coming from abroad), was about the best sector in terms of investments opportunities in the next 12 months.

The chart below shows the answer from the audience - logistics.

Source: PERE Summit Asia 2013 (with permission).

Source: PERE Summit Asia 2013 (with permission).

There could have been some selection bias, as some high profile speakers at the conference represented the sector and may have attracted the audience of such interest but nevertheless the poll results were quite clear.

In another BRIC country – Brazil - CIC, GIC, GLP and CPPIB announced joint ventures in logistics sector in November last year.

Lack of quality product and modern space, combined with fundamental factors like the rise of e-commerce (ref my separate post on e-commerce a couple of months back) are some of the key arguments for the growth in the sector. Market participants who express concerns on this sector, would raise issues of government intervention, competition and operational challenges.

E-commerce businesses are looking at pushing the improvements in the whole supply chain, ultimately focused on faster delivery of goods within China – as illustrated by this announcement from Alibaba Group.

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On a separate note – we are hosting our inaugural China Property Outlook seminar in Hong Kong on March 21 and there are still a few (but limited) seats remaining. For more details click here.